David Fickling is a Bloomberg Gadfly columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.

Nickel has been the worst performer of the London Metal Exchange's six major metals over the past year. The key ingredient in stainless steel, which topped $50,000 a metric ton in 2007, has barely risen above $10,000 in eight months.

Between 60 percent and 70 percent of producers are losing money at current prices, Ivan Glasenberg, chief executive of the fourth-biggest producer, Glencore, told an investor call in December.

Winners and Losers
Price changes of LME metals, 12-months-to-date
Source: Bloomberg
Note: Shows prices for three-month rolling forwards.

In trying to deal a blow to a mining industry he accuses of "spoiling the land," Philippine President Rodrigo Duterte, also known as the "Punisher," may have just done global producers a favor.

Nickel traded on the LME rose at the fastest pace in more than eight months Monday. The proximate cause was Duterte's new environment and natural resources minister, Gina Lopez, who said miners that don't pass an environmental audit to be completed in three to four weeks face suspension. Less than a third currently meet international standards, Lopez said last week

Not a Nickel to Spare
The Philippines is by far the biggest producer of the stainless steel alloy. 2015 mine output by country
Source: U.S. Geological Survey

The news isn't exactly a bolt from the blue. Duterte has been a longstanding critic of mining companies, passing a law to enforce a ban on them in his home city of Davao while he was mayor. It moved the market because the Philippines is far and away the biggest producer of mined nickel, according to the U.S. Geological Survey, overtaking Indonesia since that country banned exports of metal ores in an attempt to encourage a local smelting industry.

The Philippine nickel industry is dominated by small-scale local producers, so Lopez's comments will if anything give global mining companies a long-overdue reason to be cheerful. 

More Losses Than Profits
Vale's nickel unit has recorded an aggregate $2.1 billion of losses over the past decade
Source: Company reports, Bloomberg
Note: The division result includes profits and losses from nickel mine by-products including copper and cobalt.

Vale, the biggest miner, has posted an aggregate $2.1 billion in losses on its nickel unit over the past decade. BHP's Nickel West operation, the third-biggest producer according to Bloomberg Intelligence data, is still operating largely because the costs of closure are greater than the losses that may be incurred from keeping it running, Chief Executive Officer Andrew Mackenzie told an investor call in February. 

Coming Up Short
The global nickel market is forecast to head into deficit this year
Source: International Nickel Study Group, U.S. Geological Survey, Bloomberg calculations
Note: "Supply ex-Philippines" calculated by subtracting two-thirds of 2015 Philippines supply from INSG's 2016 forecast.

It's going to take a lot to lift nickel prices from the doldrums, but a shutdown in the Philippines could be just the ticket. The International Nickel Study Group is already forecasting that demand will exceed supply in 2016 for the first time in five years, by 49,000 tons or 2.5 percent of consumption.

While the Philippines may be unlikely to close two-thirds of its nickel mines, modeling a production drop on that scale is a useful thought experiment. With 350,000 tons of output quitting the market, supply would be left 21 percent short of demand. That would be more than enough to put a fire under prices.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Nickel Bulls, the Philippine Punisher Just Made Your Day

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David Fickling in Sydney at

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